Calliditas Therapeutics AB (publ) (NASDAQ:CALT) Q4 2023 Earnings Call Transcript

Calliditas Therapeutics AB (publ) (NASDAQ:CALT) Q4 2023 Earnings Call Transcript February 21, 2024

Calliditas Therapeutics AB (publ) isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Welcome to the Calliditas Therapeutics Q4 2023 Report. For the first part of the conference call, the participants will be in listen-only mode. [Operator Instructions] Now I will hand the conference over to the speaker, CEO, Renee Aguiar-Lucander; CFO, Fredrik Johansson; Maria Tornsen, President, North America; and Richard Philipson, CMO. Please go ahead.

Renee Aguiar-Lucander: Thank you very much, and welcome to the Q4 2023 presentation. I’d like to draw your attention first of all to the disclaimer notice as usual, which covers forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended, and I refer you to public filings including those containing risk factors. Next page, please. So with regards to Q4, I’d have to start just with some highlights. So obviously the key event for this quarter was on December 20th, the FDA granted us full approval of TARPEYO based on the submission of the full Phase 3 data set which we filed in June of 2023. The Phase 3 trial showed a highly statistically significant outcome on the primary endpoint of eGFR with a p value of less than 0.0001.

Additional supportive data obviously has been presented on conferences and in other places in terms of slope analysis, 3 mils per minute per year in favor of TARPEYO versus placebo, and statistically significant impact on microhematuria biomarkers such as IgA1. The new indication that we have received reflects reduction of loss of kidney function and is now also indicated for the entire IgAN population at risk of disease progression. Other things that occurred in the quarter was obviously we also received conditional approval of Nefecon in China, which was granted in November. And this approval, we believe, provides access to a very large market opportunity, as IgAN is not a rare disease in China but actually fairly common with estimates of up to 5 million patients and we’re very excited about being able to — for our partner Everest Medicines to launch commercially this year.

In the quarter, there was also initiation of a Phase 2 trial in Alport syndrome and this is being done with Setanaxib. This is the lead compound from our pipeline platform consisting of NOX inhibitors, a novel platform with Setanaxib being the first ever candidate in clinical trials. So Alport syndrome is a rare kidney disease and today there are no approved medications, and so we’re very excited about being able to hopefully repeat our success in the IgAN space of being the first company to hopefully bring an approved medication to those patients suffering from this rare disease. Also in the quarter, the USPTO issued a notice of allowance for a new patent covering TARPEYO in the US and that provides a run rate until 2043 and this was issued in December of last year.

We also towards the end of the year refinanced an existing credit line that we had with Athyrium Capital and we added a small amount of additional capital to our balance sheet in terms of just under $20 million. And actually this allowed us to continue to have a interest rate only — interest payment only kind of period for another several years. So if we can turn the page please. So talking a little bit more about the commercial highlights and this obviously on the commercial side, we saw a very strong quarter from TARPEYO, reflected by strong growth both in terms of enrollments and new prescribers. So actually we saw a 51% increase in enrollments over Q3, and new prescribers also grew by over 50%. And we believe that this is reflecting of the growing familiarity with the Phase 3 data, especially the convincing eGFR data, as well as good results and positive patient experiences from nephrologists using the product in real life.

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Q&A Session

Q4, so total revenues of $42.4 million, or SEK452 million, out of which TARPEYO represented $32.6 million, which is a 22% growth over Q3 and more than 100% growth over Q4 2022. We also achieved positive cash flow from operations in Q4 and this was a target we had set for ourselves earlier in the year and we are indeed very excited to have successfully achieved that in the year of 2023. So looking forward a little bit into the first half of 2024, we do expect that there might be some initial disconnect between the new label language and the existing pay rules, which obviously are based on the old label. As I’m sure you understand, this is a new label. This would have to go through the same kind of process in a P&T committees as when we originally launched the product a couple years ago.

And so until those P&T committees have taken place and the rules have been amended following the new label, that we are just seeing that they might take a longer period of time to actually convert enrollments into revenues as there might be some market access friction during that period of time. In terms of the — we’re also obviously we’re very excited about being having TARPEYO being selected as a potential blockbuster drug to watch by Clarivate and we believe that the disease modifying profile of TARPEYO will continue to drive significant demand from nephrologists and become a fundamental part of standard of care in IgAN. We’re also looking forward to actually a potential full EMA approval of Kinpeygo in the first half of this year. And obviously we know that our partner STADA is working on rolling out the product across other kind of geographies in Europe as we speak.

And with regards to other ex-US markets, as I’ve already mentioned, we are looking forward to our partner, Everest Medicines, having rolling out their commercial launch which they have targeted for Q2 of this year. Next page please. So some post-period events. So as I already mentioned, we received a notice of allowance for new patent for TARPEYO. This was subsequently issued and entered into the Orange Book in February of this year. And we believe that this significantly enhances product protection for TARPEYO beyond 2029. We also appointed Maria Tornsen as President, North America. She brings very strong commercial rare disease experience to this position with a background from Shire, Sanofi, Genzyme and Sarepta. We are very excited to welcoming her to the team and I’m sure that you will hear more from her over the year as she settles into the position.

Next page please. So obviously we are covering Q4 but actually 2023 as a whole has really been an incredibly eventful and successful year, which saw so many pivotal events for the company. This obviously included the successful readout of the NefIgArd Phase 3 clinical trial, the filing for approval with both FDA and EMA, the publication of the data in The Lancet, the interim readout of setanaxib data from head and neck cancer where we’re hoping to read out that full data set in the first half of this year. As I mentioned obviously the patents and the China conditional approval and ultimately obviously the full approval of TARPEYO by the FDA. So we are extremely excited of what we have achieved this year and we are looking forward to an equally exciting, if not more exciting, 2024 when we will see we bring — we start the year with a full approval in the IgAN population at risk of disease progression with a new indication reflecting the strong eGFR data.

So with that, I’m going to hand over to Richard Philipson, our CMO.

Richard Philipson: Thanks very much, Renee. So I’d like to take a moment just to look back to the end of last year. And we’re delighted to have had a strong presence at the American Society of Nephrology annual meeting in Philadelphia in November 2023. We had a total of seven posters and an oral presentation. And additionally, a commercially sponsored product [theatre] (ph) presented by Dr. Jim Tumlin. And this together demonstrated our commitment to IgA nephropathy and rare kidney diseases. So I’d now like to take a moment to highlight some of the data and analyses that were presented at ASN. Next slide, please. So firstly, Professor Richard Lafayette presented analyses of the NefIgArd Phase III trial at ASN. The focus of the presentation was the time to 30% reduction in eGFR or kidney failure, which was the secondary endpoint of the trial.

The time to this composite endpoint was significantly delayed with a 55% reduction in the risk of achieving this event in patients treated with Nefecon compared to placebo. It’s particularly noteworthy that this outcome was consistent irrespective of baseline UPCR. Next slide. Another presentation at ASN was a modeled analysis of clinical outcomes in patients in the NefIgArd trial, compared with a matched registry cohort receiving supportive care only. We used the NefIgArd two-year eGFR total slope outcome to calculate the hazard ratio for the clinical outcome of kidney failure, eGFR less than 15 ml per minute, or sustained doubling of serum creatinine using the Inker meta-analysis as reference. This modeled analysis showed a predicted median delay to the clinical outcome of 12.8 years when comparing Nefecon with placebo.

Furthermore, the modeled analysis predicted that approximately 50% fewer patients would reach the clinical outcome within 10 years, again, when comparing Nefecon with placebo. Next slide. We also presented biomarker analyses confirming previous findings from the Phase 2b NefIgArd trial. As you know, circulating immune complexes containing poorly glycosylated IgA, when deposited in the mesangium of the glomerulus, elicit an inflammatory response and drives the decline in kidney function seen in patients with IgA nephropathy. We have shown in samples taken from 160 patients in the NefIgArd trial that Nefecon significantly reduces levels of circulating immune complexes throughout the treatment period compared to placebo, supporting the disease-modifying effect of the treatment.

These biomarker observations are in line with what we saw clinically with respect to microhematuria, where significantly fewer patients treated with Nefecon had microhematuria during observational follow-up compared to patients who had received placebo. So I’d now like to hand over to Maria, our President of North America.

Maria Tornsen: Thank you very much, Richard. Next slide, please. So as Renee mentioned earlier, Q4 represented a very strong performance in terms of enrollment forms. We had our best quarter since launch and saw a significant increase in number of new enrollments received by our patient services hub, TARPEYO Touchpoints. During the quarter, we had 555 new enrollments, bringing the total for 2023 to over 1,700. During the quarter, we also had more than 300 new prescribers who made the decision to prescribe TARPEYO for the first time. And since launch, we now have over 1,600 healthcare providers who have prescribed TARPEYO. As we have communicated in previous quarters, we have very good payer coverage and more than 90% of US lives are covered.

And we are also reporting quarterly net sales of $32.6 million. Next slide, please. The fourth quarter contained some significant events for Calliditas. As noted earlier, on December 20th, we received full approval for TARPEYO from the FDA. Our full approval label reflects the reduction of kidney loss in adults with IgAN at risk of disease progression. TARPEYO is the first and only product to receive this indication for the treatment of IgAN and our new label is based on the data that was published earlier in 2023 in The Lancet. As a reminder, our Phase 3 trial met the primary eGFR endpoint and demonstrated highly statistical significance. Having a full approval label increases our addressable market and in order to meet the growing market opportunity, we also made the decision to expand our commercial and medical organizations in Q3.

Today, we have over 70 rare disease account managers who are responsible for the sales of TARPEYO. And we have also expanded other field functions such as reimbursement managers and thought leading liaisons, bringing our total field-based organization to around 100 employees. Already prior to the full approval, we had 90% payer coverage for TARPEYO, and with the new label in hand, our expanded payer and reimbursement team are engaging with US payers to ensure policies are updated to reflect the new indication. Next slide, please. We are very excited about the opportunity ahead of us. We have already seen the very positive reaction the Phase 3 data has had on nephrologists when introduced to the strong clinical results of TARPEYO. We now have an opportunity to promote our full approval label with an increased presence across sales, reimbursement, marketing and medical affairs.

While we anticipate the strong data to result in more enrollments, we do expect it will take some time for payers to update their policies, so the impact of the new label will be fully realized in the second half of 2024. We are also anticipating a seasonal impact to Q1 due to the open enrollment process, which is typical for this time of the year. In 2024, we are also expecting an update to the KDIGO treatment practice guidelines. These guidelines have the potential to broaden the definition of the at-risk population and also support the use of TARPEYO as the only fully approved drug with impact on eGFR. Today, we are already seeing that the majority of patients who reach nine months treatment continue on TARPEYO. And in the first half of 2024, we’re expecting new data from our Open Label Expansion trial.

The Open Label Expansion data set will provide us with additional clinical information on the potential benefits of a repeat course of nine months of treatment with TARPEYO. And with that, I will hand it over to our CFO, Fredrik Johansson, for the financials.

Fredrik Johansson: Thank you, Maria. And good afternoon and good morning, everyone. I will now present to you the financial overview for the fourth quarter of 2023. And as always, all numbers presented to you are in million SEK unless otherwise stated. To start with, we report SEK451.6 million in net revenues for the quarter. For the same quarter last year, we reported net revenues of SEK429 million. Please note that in the comparison quarter last year, milestones of SEK257.9 million were included, predominantly from the outlicense of Nefecon to Viatris for Japan. For 2023, we report SEK1,206.9 million in net revenues for the full year. For last year, we reported net revenues of SEK802.9 million. TARPEYO net Product Sales for the quarter amounted to SEK347.3 million or $32.6 million, which is a reported increase of 108% from the same quarter previous year and over 20% growth quarter-over-quarter.

For the full year of 2023, TARPEYO net product sales amounted to SEK1.075 billion or $101.4 million, which is a reported increase of 189% from the full year of 2022. The remaining SEK104.3 million in revenues in the quarter are related to our partnerships primarily from milestone fees from Everest Medicines in connection with the China approval but also with contribution from royalties from STADA for Europe. Our total operating expenses for the quarter amounted to SEK387.5 million compared to SEK388.7 million for the same quarter last year. For the full year of ‘23, our total operating expenses amounted to SEK1,519.5 million compared to SEK1,209.6 million for the full year of ‘22. The cost for research and development increased by SEK4.4 million in the quarter to SEK106.7 million compared with SEK102.2 million for the same quarter previous year.

And we continue to primarily invest in our pipeline where we have three expected data readouts this year, including the readout in Head and Neck Phase 2 trial, which is expected in the first half of this year. The cost for sales and marketing increased by SEK6.7 million in the quarter to SEK198.5 million compared to SEK191.9 million for the same quarter previous year. The increase is primarily related to sales and marketing of TARPEYO in the US, where we during the quarter continued our preparations to be prepared for the TARPEYO full approval that we received in the end of the quarter. We are very pleased that we made an operating profit in the quarter of SEK41.8 million compared to SEK32.5 million for the same quarter last year. We are also very pleased that we were cash flow positive from operating activities in the quarter where cash from operating activities was SEK22.8 million compared to SEK230 million for the same quarter previous year.

In the fourth quarter we refinanced our credit facility with a EUR92 million loan from Athyrium Capital to extend the interest only period to the end of 2026. We paid back the EUR68 million Kreos loan once the new credit was agreed and the cash flow from financing activities in the quarter was SEK208.5 million and originates from the net of the loan activities. This leaves us with a net increase in cash in the quarter of SEK229 million and we continue to have a healthy cash position of SEK973.7 million or approximately $93.6 million at the end of the quarter. In our year-end report today, we also provide an outlook for total net sales for this year. We expect continued revenue growth this year, and we estimate our total net sales for 2024 to be between $150 million and $180 million.

As the commercial revenue over time will incorporate growing sales from both Europe and China, we will provide an outlook on this basis going forward. TARPEYO revenues will obviously make up the vast majority of the sales also this year, and we do not expect potential milestone revenues from our partners to be material in comparison to product sales. That was all for me. And now back to you, Renee.